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June 1, 2013

13Ds are filed with the Securities and Exchange Commission within 10 days of an entity's attaining a greater than 5% position in any class of a company's securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from May 23 through May 29. Source: InsiderScore.com

Activist Filings

Trigran Investments expressed frustration with what it called a "lack of action" at the company.

In a May 23 filing, the investment firm said that it had been a "patient" shareholder for almost six years and had "generally been pleased with management's ability to control expenses and generate substantial free cash flow." It also noted, however, that it had become "increasingly frustrated" with the current board "as the amount of cash on [NVE's] balance sheet has grown significantly over time without the issuer engaging in any type of capital allocation program for the benefit of shareholders."

Trigran reported that it recently has had discussions on the topic with NVE's CEO, but added that attempts to discuss the matter with the board "have been met with resistance." Trigran is calling on the NVE board to have an "open discussion" on "the best method to deploy excess cash," adding that it might also seek to discuss the matter with other NVE shareholders.

Trigran also said that it bought 33,502 shares from April 8 through May 23 for $50.90 to $54.15 each and now owns 406,643 shares (8.4% of the total voting shares).

Starboard Value entered into an agreement with Tessera that will force a shake-up of the company's board and the appointment of an interim CEO.

According to the May 22 agreement, following the 2013 annual meeting, the board will have 10 members, up from the current eight, and will be made up of a mix of Starboard and company nominees. In addition, the company agreed to appoint one of the Starboard nominees as interim CEO, with the board's nominating committee initiating a search for a permanent chief executive.

Starboard said it owns 4,075,000 shares (7.7%) after buying 76,854 from April 17 through May 7 for $18.79 to $20.42 each.

First Manhattan disclosed that it owns 9,989,604 shares (9.9%) after buying 675,728 from April 26 through May 22 for $12.50 to $13.48 each. It also said it plans to nominate three candidates to the Vivus board.

TPG Capital reduced its holdings to 47,122,500 shares (51.2%) by selling 1,800,000 on May 23 at $25.23 per share. The sale was made in connection with an underwritten offering, and the price reflects the underwriter's discount.

Key Numbers: 400 basis points (4%): decline in Alere's gross margins over the past three years. 600 basis points: drop in its operating margin over that period. 35%: decline in Alere's stock price during that period.

Behind the Scenes: Coppersmith was founded in 2012 by Jerome Lande, a former partner at MMI Investments, a hedge fund. Coppersmith is an event-driven fund with the flexibility to be an activist. (Lande has significant activist experience from his days at MMI.) Coppersmith sees three big issues at ALR:

Capital Structure: The company is too highly levered (six times), and its announcement that it will get leverage down to four times by 2015 is too little, too late.

Strategic Configuration: Alere has done $8 billion of acquisitions, but no meaningful divestitures.

Operational Efficiency: The company must improve its margins.

Divesting itself of the health-management business and integrating or selling all of the lines in its point-of-care diagnostics unit would go a long way toward solving all of these problems. A sale of the toxicology business, which is not necessarily synergistic, could garner proceeds to pay down debt. Moreover, by integrating all of the acquisitions, margins should improve, not decline as they have over the past several years.

Coppersmith also is likely to seek significant management changes.

-- Kenneth Squire

The 13D Activist Fund, a mutual fund runby an affiliate of the author and not connected to Barron's, has no position in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.